RFA challenges ethanol assertions in Senate anti-VEETC letter

Responding to a letter circulated by Senators Dianne Feinstein and Jon Kyl urging the expiration of the tax incentive for ethanol use, the Renewable Fuels Association (RFA) has issued a statement.

Responding to a letter circulated by Senators Dianne Feinstein and Jon Kyl urging the expiration of the tax incentive for ethanol use, the Renewable Fuels Association (RFA) issued the following statement:

“Calling for the elimination of investment in domestic ethanol production may seem pennywise, but is extraordinarily pound foolish. Eliminating the tax incentive could erase the $3 billion of net revenue for federal tax coffers generated by the domestic ethanol industry in 2009 and put tens of thousands of Americans out of work. As nearly 10 percent of Americans are still without work and some 800,000 facing the expiration of unemployment benefits, it is counterproductive to relegate thousands of additional Americans to the same fate.”

According to a study by economist John Urbanchuk, domestic ethanol production returned $8.4 billion to federal tax coffers in 2009 - $3.4 billion more than the cost of the tax incentive. Additionally, economic activity generated by American ethanol production added more than $7 billion of tax revenue generated for state and local governments. At the same time, the domestic ethanol industry helped support nearly 400,000 jobs and provided more than $16 billion in increased household income. Addressing the senators concerns about imported oil, it is important to also factor in the savings represented by reducing America’s need for imported oil by 364 million barrels – a $21 billion savings.

Addressing the concerns raised about the secondary tariff on imported ethanol, the RFA stated:

“The tariff on imported ethanol is neither a burden on imports nor a factor driving America’s dependence on imported oil. The tariff simply exists to offset the value of the tax credit, preventing American taxpayers from subsidizing foreign ethanol producers. In a time of budget concerns and tax debates, propping up industries in other nations that already enjoy the largesse of their native governments seems counterintuitive.”